Economy soars 7.3% in '07, fastest growth in 31 years

(Updated 12:36 p.m.) The Philippine economy expanded 7.3 percent in 2007, from a year earlier, due to a strong performance by both the services and industry sectors, the government announced Thursday.

In a briefing, the National Economic Development Authority said this is the Southeast Asian country's fastest pace of gross domestic product growth in 31 years. The agency said GDP growth in 1976 was measured at 8.8 percent.

GDP is the broadest measure of goods and services produced in a country in a period of time.

The 2007 GDP figure is also near the top end of NEDA's predicted growth range for the year of within 6.9 percent to 7.3 percent.

The services sector, which is powered by the sunshine industry of business process outsourcing, grew 8.7 percent in 2007, from its 6.7 percent expansion in 2006.

The industry sector, which includes a resurgent mining industry, rose 6.6 percent from 4.5 percent a year earlier.

Despite the phenomenal growth achieved by the economy, the government said it will be remain vigilant of downside risks that could hamper growth in 2008.

"Given the remarkable growth in 2007, the continued weakness of the US economy and the volatile oil prices are clouds in the horizon that pose downside risks to growth in 2008," NEDA chief Augusto Santos said.

HSBC economist Frederic Neumann however expressed confidence that a slowdown in the US economy will have little effect on the Philippines, which he believes is powered chiefly by domestic demand.

"The Philippine economy appears in good shape to withstand a US slowdown this year as the expansion is mainly driven by internal demand. We also continue to expect remittances to prove resilient in 2008, given the remarkable geographic and professional diversification of OFWs," Neumann said.

"Today's release sets the Philippines up for another good figure in the first quarter, thus helping to dispel concerns that growth will falter," he added.

Seasonally adjusted GDP grew 1.8 percent in the fourth quarter.

Gross national product, on the other hand, surged 7.8 percent in 2007, also its fastest pace of expansion in 31 years. The computation for the country's GNP includes the contributions of the Overseas Filipino Workers to the economy.

In an earlier interview, the National Economic and Development Authority said a robust industry and services sectors powered growth in 2007.